Concrete policy changes from the Chinese government added to the global afterglow of Janet Yellen’s sweet-talking the markets, to lead all global stock indexes higher.
Yellen pledged a continuation of present Fed easy money policies at her confirmation hearing, which has pushed market expectations of QE tapering out to March. Despite this, the dollar didn’t see much pressure until this morning, perhaps caused by the Empire State manufacturing index dropping into negative territory, when a large increase was expected. Analyst had predicted a rise from last month’s reading of 1.5 to jump to 5.0, but instead, it dropped to a -2.2, showing contraction in the manufacturing sector of the Northeast U.S.
The Chinese government has circulated a memo of details concerning the recently pledged reforms, which has boosted Asian, and to a lesser extent, Euro markets. Beijing promises a relaxation of the “One Child” policy, greater guarantees for farmers in protecting their land from local government seizures, and to allow more private investment in the state-owned business sector.
Wall St. is set to open higher and chase yet another record, following the cue of other markets overnight. Yellen’s promise of more QE has moderated Treasury yields. The yields on 10-year Tbills has eased to 2.70% this morning.
Gold eased slightly overnight after riding a modest “Yellen boost” to retrace yesterday’s pre-hearing levels in Europe, but is gaining in New York. Silver, which didn’t see much of a boost from Yellen’s testimony yesterday, saw selling pressure at the London open, but also regained lost territory in early New York trading. Platinum in moderately lower, while palladium saw a moderate takedown in early U.S. trading.
Stock markets may start to see a top leading into Thanksgiving, as funds begin to book year-end profits and sell to the mom-and-pop investors entering the market late. Precious metals prices are likely to closely react to the dollar in absence of any major news.